FFG(X) Security Concerns: The Potential Impact the Canadian Surface Combatant Program

By Danny Lam

July 11, 2017

The US Navy’s FFG(X) program requesting information from both domestic and foreign shipbuilders for derivatives of an existing design for a class of 20 ships that can be built as soon as 2020 with the goal of keeping costs down by using common equipment.

The requirements in theory can be met with uprated LCS or a USCG National Security Cutter, or a refreshed Oliver Hazard Perry Frigate.

Other options like the ARGE F125, Fincantieri FREMM, Navantia F-105 BAE Type 26 GCS, Odense Iver Huitfeldt, etc. are known to be in the running if Congress and the Administration will allow foreign designs to compete and win.

The First deadline for the FFG(X) is August 24, 2017.

The introduction of foreign bidders into a major US Naval procurement introduce many issues beyond long term support, maintenance and upgrades by foreign prime and subcontractors.

Security of commercial and military secrets, intellectual property owned and controlled by foreign contractors is a major issue.

Every US and allied defense contractor, from major primes to small subcontractors, is being targeted by Chinese, Russian, Iranian, North Korean, and many others spys and agents eager to acquire commercially and militarily sensitive information.

What are the ramifications of these issues for allowing foreign bidders into the FFG(X) program?

Canada is presently in the midst of a major procurement for Canadian Surface Combatants (CSC) that have very similar requirements to the FFG(X) program.

Indeed, most of the qualified bidders for the Canadian program are candidates for the FFG(X) program. The Canadian program is unique in that it is managed not by the Canadian Federal Government (i.e. DND or PSP), but management of the program including soliciting bids and setting requirements is managed by a Canadian private company Irving Shipbuilding (Irving). Irving will also be the builder of the CSC design chosen by Irving.

Irving, backed by the Government of Canada, required bidders for the CSC program to submit, as a part of their proposal,

“to hand over virtually all their intellectual property [IP] data for the complex combat systems that would be installed on the warships…. [Including] all their foreground and background data… [inclusive of] … critical software coding.” (Brewster, CBC, July 28, 2016)

The data / IP handed over by the bidder (not the winner) will then become the property of the Government of Canada who will in turn license it to Irving Shipbuilding.

These sensitive military and commercial secrets is not subject to any known licensing terms or restrictions on transfer, or limitations on other use beside bid evaluation by either the Government of Canada or Irving Shipbuilding. For that matter, no known minimum standard of care by the Canadian Government or Irving Shipbuilding for data protection is stipulated a priori.

In other words, both the Government of Canada and Irving will have seen all the bidder’s IP or the bidder will be disqualified. The original RFP deadline was April 27, 2017, but have since been extended to mid-August 2017. Irving set a date of June 15, 2017 for review of draft proposals to for compliance with the RFP.

Any bidder that submitted a qualified proposal to Irving / Government of Canada presumably would have met the requirement to have disclosed all their IP with no limits or restrictions on the use of the data by the Government of Canada or Irving Shipbuilding.

What are the security consequences?

Access to the database of data being held by the Government of Canada and Irving Shipbuilding submitted by every major allied non-US shipbuilder will enable aggregation and analysis of the dataset to discern the design principles and good and bad points of every contestant.

And from that analysis, either come up with a superior design that cherry picks the best of the best, or, in the case of Irving Shipbuilding, set up to become a competitor to every bidder worldwide (whose IP they now have unrestricted use of).

This is, de facto, Canadian government sponsored Intellectual Property Piracy of militarily and commercial secrets from US allies under the guise of a multibillion dollar Request for Proposal.

The security implications of what Canada’s piracy policy goes beyond just theft of commercial secrets by Canadian state sponsored pirates. The repository of this data in Canada’s government agencies and Irving Shipbuilding will become the principal, top priority target of every spying agency anxious to get a hold of a database that is available nowhere else in the world to any other party.

Given Canada’s lackadaisical attitude toward safeguarding sensitive technologies – particularly with a Trudeau regime desperate to curry favor with the CCP-PRC for a “free trade” deal, it is a matter of time before this knowledgebase is compromised, whether by neglect or accident or subversion. Compromise of this database will lead to compromise of the entire allied (x USA) fleet of frigates.

That is over and above the risk of copy-cat tactics by PRC’s allies like Pakistan, Malaysia, etc.

The security issue was raised and extensively discussed in October 2016 by both the bidders and independent observers.

The Liberal regime and their minion Irving Shipbuilding, brushed off the concerns and refused to budge as recently as July 28, 2017. (Brewster, CBC, July 28, 2017) As it stands, it has to be assumed that every bidder who submitted a draft proposal to the CSC program have their IP and data compromised.

What are the potential consequences for FFG(X)?

If a foreign competitor for the FFG(X) program are to be chosen, it immediately raises the question as to the extent to which their designs have been compromised through their participation in bidding for the CSC program. The US Navy will not be amused by the prospect of having the design for a major new class of 20 ships effectively given away to peer competitors like Russia and China before even the first ship is commissioned.

Disqualification of foreign FFG(X) bidders due to security concerns will narrow the field and make it more difficult for the aggressive schedule to be met by the US Navy.

Whereas the Pentagon and US Government have both worked diligently to revamp and upgrade security against the threat environment of the 21st century, Canada under the Liberal regime, at least in the case of the CSC program, have diluted their existing and wholly inadequate security regime with predictable consequences.

Under the present conflicting requirements for the FFG(X) and CSC program, bidders have a choice to make in the next month: They can participate in one or the other, but not both programs.

It should not be a hard choice for a shipbuilder with a world class product.

Editor’s Note: The security concerns raised by Lam with regard to the U.S. also apply to the foreign bidders for the Canadian program. Is it really in the interest of a major European producer to put their IP and data at significant risk given the uncertainties posed by the Trudeau Administration appraoch?